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Fed Officials ‘Open’ to March Half-Point Rate Hike

A U.S. central bank official said on Wednesday that the Fed would remain open to a key rate hike from February 1 at its next meeting, with U.S. inflation remaining strong. .

“At this point I’m open to a 25 or 50 basis point hike,” or a quarter or half a percentage point, Minneapolis Fed President Neil Kashkari said in a meeting with Fed leaders.

The 25 basis points increase would mark a continuation of the previous hike in the key rate on February 1. The pace of rate hikes has slowed after a 50 basis point increase in December, following four increases of 75 basis points before.

If the central bank decides to raise rates by 50 basis points at its next meeting on March 21 and 22, it would be a fresh acceleration.

At this meeting, as at halftime, each Fed official will plot how far rates will rise on a document called a “dot plot,” a document that shows expected rates using dots.

“I think where the points finish is more important than whether we go above 25 or 50 in the next meeting,” Neel Kashkari said.

Inflation in the U.S. rose again in January to 5.3% from 5.4% a year earlier, according to the PCE index, favored by the central bank, and which it wants to bring back to 2%.

To achieve this objective, it has been raising its key rate for the past year. It was in the range of 0 to 0.25% then and now stands at 4.50-4.75%. The company warned that further increases could be expected.

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Another gauge of inflation, the CPI index, which is a key index and indexed to pensions, for its part, showed a slight slowdown to 6.4% on the year, against 6.5% in December, although it accelerated in more than a month for the first time. From September, to 0.5% against 0.1%.